PAL considers taking in new investor

FLAG CARRIER Philippine Airlines may formally consider investors this year once it finalizes a “long-term plan” involving new routes, the possible acquisition of next-generation planes like Airbus’ A350, and new partnerships with carriers in North America and Europe.

PAL president Jaime Bautista said during an Inquirer roundtable discussion last week that the timing would be consistent with the carrier’s plan to bring in a new strategic investor in three years.

This strategy has baffled some observers given that San Miguel Corp. had played this role from 2012 to 2014, or until PAL’s owner tycoon Lucio Tan unexpectedly bought out the conglomerate’s 49 percent stake for over $1 billion last September.

Bautista clarified that the airline was not seeking a local partner. He added that he was unaware of talks between Tan, who sits as chair of operator PAL Holdings Inc., and an investor from the Middle East for the sale of up to 40 percent of PAL, as reported by Bloomberg News.

“We have to finish this long-term plan before we can really start talking to a possible partner,” Bautista said. “We don’t want to talk to them until our business plan is firm.”

Bautista declined to reveal specific parts of the company’s growth strategy as well as details on when PAL can become profitable in an industry dominated by the presence of aggressive budget carriers.

What remains clear is that PAL intends to expand its network in the region and beyond by actively seeking out alliances with carriers in profitable markets like the United States and Canada.

“What we need is a codeshare agreement with an American carrier,” said Bautista. PAL is eyeing talks with US-based carriers like American Airlines and Delta Air Lines.

“We are also working on a codeshare with carriers in Canada and Hawaii,” he said.

PAL also flies to the United Kingdom—its only direct route to Europe. He noted that the business was weaker than expected, but PAL was nevertheless keen on growing the market through a partner.

“We need a codeshare agreement with a European carrier,” he said, citing a potential tieup with British Airways and Germany’s Lufthansa. “We need to be able to carry passengers beyond London and, for us to do that, we need a partner.

To realize these plans, Bautista said PAL could acquire new long-range planes, despite ongoing negotiations with Europe’s Airbus to defer certain orders for mid-range Airbus A321s.

Of PAL’s existing fleet of 73 planes, it only has six Airbus A340s and six Boeing 777-300ERs, mainly deployed for flights to the United States.